the changing role of inflation

[Ed Breen]

I don't know what you mean by 'how long I am into trading.' I guess this is my day for definitions. I have been trading my own money for many years. Right now I am about 65% short and 35% long. I am long China and short Europe and generally disgusted with most of the U.S.

 

[jueco2005]

Inflation is the worst tax of all.

The easiest way to steal.

I dont even consider anyone who favors inflation....an economist.

Sometimes Milton Friedman can be confused as a typical monetarist.

He just wanted to keep the purchasing power constant............this is by the way...........easier said than done.

 

[morganist]

Quote from Ed Breen:

Morganist, I have a few questions before I make a positive response to our discussion about the aggegate demand as an output driver:

1. What metric do you use to describe aggregate demand? Is it GNP or something else?

2. What do you mean by 'transfer function'? please define that term for me so that I can understand you.

3. How do you define 'liquid' in your context? To me the term describes the function of an active market where there is a narrow range between the bid and ask price and a high volume of immediate transactions. I am puzzled how you could have something used as 'currency' that was not liquid.

4. When was the time of production restraints and what were the produciton restraints you referred to when you wrote, "the quantity theory of money that was developed in a time of production restraints"?

5. What, to you, is the 'premise' of the Quantity Theory of Money?

So, if you will straighten me out on this jargon, so I can understand exactly what you are saying, I will try to respond to you in a positive way. Thanks,

1.) It is kind of irrelevant for the debate. Whatever the metric, it is the relationship with output that is important and how the role of inflation has changed from a wealth measurement to a market stability tool.

2.) Do you mean the transaction function. This is the function of purchase using a currency (medium of exchange in stead of barter that has its own value. When the currency is used it has to have a value in itself for people to sacrifice goods for it). The operation of people exchanging currency for goods is the function of transaction, depending on the amount of times the currency unit is used the ratio of money to goods is altered. It is a topic of debate as to whether a large number of money units to encourage the transaction function velocity enables increase output or not.

3.) Liquidity is the ability of the currency to obtained to enter transaction. Namely the higher the level of aggregate demand the more currency units are in the economy enabling transactions.

4.) The time of production constraints was before technological and labour changes in the last century or two. When there was little ability to produce and have alternative markets in other words restraints on competition. This is partly down to the political situation in Europe dictators, monarchs etc.

5.) This is a long one and I cannot explain in a short answer. All I will say is the basic concept is the idea greater output leads demand rather than demand leads output (although the view is output is linked to price). However I think the situation with the power of demand and how it directs economies has changed since the quantity theory of money.

I was unsure whether you are aware of the concept so I have provided this link.

http://en.wikipedia.org/wiki/Quantity_theory_of_money

Is that helpful.

 

[Ed Breen]

Thanks, your responses were very helpful to me and I understand where you are coming from much better now. Unfortunately that understanding leads me to the conclusion that I have nothing positive I can say that is likely to help you. Good luck with your book, I am sure it will read like one written by my old acquaintance, the late author Anthony Burgess, during the period when he was shooting speed and drinking gin trying to out do James Joyce in his penchent to invent a new language. You never know,...as Anthoney used to say, "every dogma has its day."

 

[morganist]

Quote from Ed Breen:

Thanks, your responses were very helpful to me and I understand where you are coming from much better now. Unfortunately that understanding leads me to the conclusion that I have nothing positive I can say that is likely to help you. Good luck with your book, I am sure it will read like one written by my old acquaintance, the late author Anthony Burgess, during the period when he was shooting speed and drinking gin trying to out do James Joyce in his penchent to invent a new language. You never know,...as Anthoney used to say, "every dogma has its day."

i had a look at you profile. impressive. i hope i see you around the forum.